Friday / June 21.


ogJAIPUR: The Rajasthan government while censuring previous Congress government for ignoring state’s interests while signing memorandum of understanding (MoU) with Hindustan Petroleum Corporation Limited (HPCL), has banked on the HPCL’s own consulting firm, SBI Caps’ report.


Chief minister, Vasundhara Raje, during her budget speech, said that based on appraisal report, the project will earn revenue of more than 68,000 crore within 15 years, from the day of production.


According to government officials, the data was cited from the report prepared by HPCL-appointed consulting firm, SBI Caps. Riding on these figures, the government is firming its stand on renegotiating the terms. “These facts came up while reviewing the project. Asking for a interest free loan for Rs 3,736 crore per annum, for 15 years, is unjustified,” said a source in the government.


With appraisal report confirming major gains from the project, once refinery gets functional, government now argues that if profits are high, why should HPCL be the greater beneficiary. As per the MoU, HPCL has 74% stake, while the state holds just 26%, even after giving land, money and oil for the project.


To further review the project, state government has also announced to hire a consulting firm. Though, government officials are tightlipped about the name of the firm, the agency will submit its report within the stipulated time. Parliamentary affairs minister Rajendra Rathore, had also mentioned this in the assembly while replying to the demands of grants on mining and industry.


“Mandate of the firm will be to highlight areas where there are anomalies in MoU. We will re-examine those points and make changes accordingly . The state’s inter est is paramount and our endeavour is to bring in more benefits for the state which were being overlooked earlier”, said Rathore.


Another contention on which Rajasthan government and HPCL are at daggers-drawn is the availability of oil. HPCL has maintained that crude oil availability in Barmer can dip, forcing the company to look for other avenues to run the refinery. Based on this premise, they are seeking loan from the government.


The state differs from the company’s view that there may be shortage of oil in Barmer. Quoting recent figures from Cairn India exploring targets, Rathore claimed that Rajasthan has not only got plenty of crude oil reserves but also gas reserves in Barmer-Jaisalmer basin.


It is expected it would touch production of 7 billion barrels from the present 4.6 billion barrels. Based on geological formations, Cairn also spotted new crude oil reserves in Fatehgarh, Dharvi-Dungar, and Barmer Hill (names coined in geological survey). The minister in-charge also said that Cairn India has also found gas reserves to the tune of one trillion cubic feet.

(Source: Times of India August 6, 2014)





NEW DELHI: Keen to set up a ‘gas grid’ in the country, government is working on the Jagdishpur-Haldia gas pipeline and termed it as the first ever gas corridor in the Hindi heartland.


It said once the pipeline is completed, it will not only help fertiliser plants but will also provide fuel to steel mills.


Chemicals and Fertilisers Minister Ananth Kumar told the Lok Sabha that the proposed pipeline will help fertiliser plants in Gorakhpur (UP), Sindhri (Jharkhand), Barauni (Bihar), Durgapur and Haldia (both West Bengal).


He said the Budget speech of the Finance Minister also has a reference to the ‘gas grid’ and it is an important vision of the Modi government.


Responding to supplementaries on sick and shut fertiliser plants, he said effrts are on to ensure that the shut plants are restarted.


He was asked that while India imports fertilisers, several of country’s fertliser plants were shut.


He said government has planned financial restructuring of three sick plants: Madras Fertiliser Limited, Fertilisers and Chemical Travancore Limited and Brahmaputra Valley Fertilisers Corporation Limited.


A total of 44 major fertiliser plants are operating in the country. While 12 are operating in the public sector, nine are in the cooperative sector and a majority of 23 are in the private sector.

(Source: The Economic Times, August 6, 2014)





Bangalore: Local shipbuilders such as Larsen and Toubro Ltd and Pipavav Defence and Offshore Engineering Co Ltd, looking to build at least three liquefied natural gas (LNG) carriers that will be hired by GAIL (India) Ltd to transport LNG from the US, will have to match the price quoted by overseas yards where six of the sophisticated carriers are to be constructed, to win the deal.


Matching the price quoted by specialists in Japan, Korea and China could be tough for Indian shipbuilders, but they say they are ready to sacrifice margins to enter the lucrative business, mainly through government intervention.


It costs more than $200 million to build an LNG ship.


GAIL will not order the ships at shipyards—both overseas and Indian: it plans to hire the carriers from fleet owners who will have to construct some of the ships in India.


The price of the ship is crucial for owners, as it is a big factor in calculating the daily hire rates, which, in turn, is one of the criteria for deciding the contract.


On 1 August, GAIL invited bids from ship owners for time chartering (hiring) nine LNG carriers for 20 years in lots of three vessels each with a capacity to carry as much as 180,000 cubic metres of LNG (the capacity is for each ship).


Prospective bidders must quote for lots of three vessels with a provision that under each lot, one vessel shall be built in an Indian yard.


“It’s (the decision is) really good,” said a spokesman for the Shipyards Association of India (SAI), an industry group that had lobbied for constructing some of the LNG ships required by GAIL in India.


“Otherwise, India will never be able to build LNG carriers. This is how China started building LNG ships. Somewhere down the line you have to get started somewhere,” he pointed out. “Entering the business is very important for us. It will put us in a different league altogether. As far as margins and profitability are concerned, it has to be evaluated, but it is not much of a focal point at this stage when you are getting started in a new business and competing with established entities in Japan, Korea and China.”


Ship owners winning the contract will have to deliver six ships under the first two lots to GAIL in two batches: four built at overseas yards within a period of eight months between 1 August 2017 and 31 March 2018, and two ships built at Indian yards within six years from the award of contract.


The remaining three ships have to be delivered to GAIL in two batches: two of them built at overseas yards between 1 February 2018 and 30 September 2018 and one ship from an Indian yard within six years of award of contract.


In effect, overseas yards will have to deliver six LNG carriers in two-and-a-half years while Indian yards will get six years to build three ships.


Local shipbuilders eying the GAIL deal are in talks with global yards that have built LNG ships for technical collaboration and technology transfer.


Also, GAIL has sought price bids for two additional ships.


“GAIL is undertaking an exercise of swapping or trading of LNG. Based on the outcome of such exercise, the final requirement of vessels shall emerge and award shall be made accordingly,” says the tender reviewed by Mint.


If an additional ship is needed, it shall be built at an Indian yard. If two is needed, the first vessel shall be built at an Indian yard and the second at an overseas yard, the tender says.


The ship owners and operators would be selected on the basis of the lowest day rates quoted by them for transporting 5.8 million tonnes per annum (mtpa) of LNG from the US beginning September 2017 for 20 years.


GAIL has the option to take a 10% stake in each of the ships. State-run Shipping Corporation of India Ltd (SCI), which is assisting GAIL with the tender for hiring the ships, will be given a step-in right to take at least a 26% stake in each of the tankers, the tender said.

(Source: Mint August 6, 2014)




Hyderabad: Officials of PSU gas major GAIL and multinational giant Shell called on Andhra Pradesh chief minister N Chandrababu Naidu on Tuesday to apprise him of the need for removing roadblocks (if any) for fasttracking works on the proposed floating, storage and re-gasification-based liquefied natural gas terminal at Kakinada.


Naidu is learned to have assured them the project was an overriding priority and instructed officials to ensure there were no hindrances to the project at the local level.


The Rs 5,000-crore project, which involves a floating, storage LNG terminal in Phase-I for Rs 3,500 crore, and land-based pipeline network in the following phases, is expected to generate around Rs 3,500 crore in tax revenues for Andhra Pradesh.


While GAIL is a JV partner, Shell was last month inducted by the state government with a 26 per cent equity in the SPV.

(Source: Business Standard August 6, 2014)




New Delhi: ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), has emerged as the Indian company having the most international exposure for the second consecutive year, says a survey.


The firm has topped the list of 20 most internationalised Indian companies, prepared by Indian School of Business (ISB).


Global education firm Core Education & Technologies which ISB says showed a sharp increase in the size of its foreign assets has been ranked at the second place.


Interestingly, ONGC Videsh was the only state-owned company among the top 20 Indian companies which also included six Tata Group firms.


Besides Tata Global Beverages at the third spot, others are Tata Steel (6), Tata Consultancy Services (7), Tata Motors (8), Tata Communications (10) and Tata Chemicals (16).


‘Over the last decade, the engagement of Indian companies with overseas markets has undergone a complete transformation.


India has gradually become more integrated with the global economy and Indian companies are emerging as important players on the global landscape,’ ISB said.


‘Indian transnational corporations have significantly increased their international asset base as well as their international revenues over the past decade,’ it added.


The top 20 Indian companies have been ranked from a list of 29 firms that participated in the survey.


Other companies in the list are Suzlon Energy (4), Motherson Sumi Systems (5), HCL Technologies (9), Hindalco Industries (11), Jubliant Lifesciences (12), Dr Reddy’s Laboratories (13), Punj Lloyd (14), Godrej Consumer Products (15), Piramal Enterprises (17), Bharti Airtel (18), Zee Entertainment Enterprises (19) and Cipla Ltd (20).


The rankings, which have taken into account figures for fiscal ended March 2013 — are based on three factors: percentage of international assets against total assets, overseas revenues against total revenues and percentage of foreign employees with respect to total headcount.

(Source: Millennium Post August 6, 2014)




Kolkata: A delay in creating requisite gas transportation infrastructure by Oil and Natural Gas Corporation is holding up the commissioning of a 363.3-MW unit of ONGC Tripura Power Company (OTPC).


OTPC, which is setting up a 737-MW plant in the North-Eastern State, had commissioned the first unit of the project in January this year. At a little over Rs. 3 a unit (provisional generation tariff), OTPC sells the cheapest gas-based power in India—nearly Rs. 1 cheaper than the electricity generated by several new coal-based power plants of NTPC.


According to Manik De, power minister of Tripura, though the second unit was ready for operations some time, it could not be brought on stream due to non-availability of gas.


“ONGC may miss the August deadline for starting gas supply. We are now expecting the unit to start in September,” he said.


Even if gas is available, the OTPC plant cannot run at full load, as the transmission line from Palatana in Tripura to the national grid at Bongaigaon in Assam, covering a distance of more than 600 km, is not ready.


This is due to inordinate delay on the part of the Assam Government in granting green clearance for two towers (out of a total of 1,831 towers).


According to sources, if the second unit comes on stream in September, nearly 80 per cent of the generation can be evacuated. This is against a prescribed load-factor of 95 per cent to break even.


According to De, the 101-MW gas-based facility of North Eastern Electric Corporation Ltd (Neepco) at Monarchak in Tripura is lying idle for delay on the part of ONGC in ensuring fuel supplies.


The two plants (OTPC and Neepco) were expected to be major revenue earners for Tripura through export of electricity.


De is not expecting the Neepco facility to be operational before December.

(Source: Business Line August 6, 2014)




CHENNAI: Indian Oil Corporation (IOC) is uploading the names of its customers who have opted out of subsidy for cooking gas cylinders of its Indane brand, on its website in a bid to encourage more affluent sections of the people to follow suit.


So far, 1,470 consumers of Indane have given up the subsidy after the company recently launched its “nation building campaign,” by sending text messages to consumers asking them to give up the subsidy. “We appreciate your action of opting out of the subsidy. It truly demonstrates your care and concern towards the less privileged. Your example will surely motivate millions. Annual savings accrued till now is R88,20,000,” the Indane website says in its ‘Scroll of Honour’ section.


The scroll provides details such as names and states of consumers who have opted out of the subsidy scheme.


The SMS sent to consumers says: “Want to join nation building? Its simple — just give up the LPG subsidy. Visit www.indane.co.in for details.”


The public sector oil major was contemplating other communication avenues to reach out to consumers who could afford to pay the market prices, IOC senior corporate communications manager V Vetriselvakumar said.


“The SMS to consumers is one part of the campaign and we are in the initial stages. We are exploring other options as well. The idea is to effectively reach out to consumers,” he added.


If about one crore affluent consumers across the country presently availing subsidised LPG from state-run oil marketing companies give up the subsidy, there is a potential to save approximately R3,000 to R3,500 crore, he pointed out.


Presently, subsidised domestic LPG costs R401 per 14.2 kg cylinder while the non-subsidised costs R922 in Chennai.


Faced with growing subsidy burden, the previous UPA government had put a cap on domestic subsidised cylinders at nine per household for a year but withdrew it in January this year after Congress vice-president Rahul Gandhi made a demand for it.

(Source: The Financial Express, August 6, 2014)





NEW DELHI: Cairn India is likely to get a 10-year extension for its license to explore and produce oil and gas from the prolific Rajasthan block but may have to pay more profit petroleum to the government to get a term beyond 2020.


A Committee headed by the Directorate General of Hydrocarbons (DGH) on policy for grant of extension to the Production Sharing Contracts (PSC) for small, medium-sized and discovered fields that were awarded to private firms in 1990s, has recommended a uniform 10-year extension but on revised terms and conditions.


The panel has recommended that contracts may be extended for 10 years for both oil and gas fields or the balance economic life of the field, whichever is earlier, but with revised terms and conditions, sources said.


The current PSCs provide for a 5-year extension in case of an oil field and 10 years in case of gas discoveries.


It recommended a minimum 50 per cent government share of profit petroleum from small fields and 60 per cent in case of medium-sized fields.


At present, the government’s profit petroleum ranges from 25 to 60 per cent. In case of Cairn’s Rajasthan block, it is 50 per cent.


Cairn’s Rajasthan block is not among fields for which the Committee has recommended the extension policy but the same principals are likely to be used for it as well, they said.


Sources said Cairn block has been kept out of this policy as unlike other discovered fields like Panna/Mukta and Tapti and Ravva, state-owned Oil and Natural Gas Corp (ONGC) is the licensee of the Rajasthan block.


ONGC holds 30 per cent interest in Rajasthan block and is also the licensee. As per terms of the Rajasthan PSC, the block is to return to the licensee after expiry of the term.


Also, ONGC becomes the owner of all facilities once its cost is recovered from sale of crude oil.


While in case of other small, medium and discovered fields, the extension application will have to just come from the operator, in case of Rajasthan block ONGC is to agree to continuation of operations under Cairn and mutually agreeable terms.


Sources said the panel recommended that applications for extension of contract should be made at least two years in advance of the expiry of the contract but not more than 5 years in advance. Also, the proposal should have approval of the Operating Committee, comprising of all partners.


Cairn’s Rajasthan license expires in 2020 and as such it will be eligible for submission of the application not earlier than 2015.


DGH will examine and convey its views on technical aspects to Oil Ministry within eight months, after which the government will take 4 months for grant of extension.

(Source: The Economic Times, August 6, 2014)




NEW DELHI: Essar Projects today said it has bagged a $ 54 million (over Rs 328 crore) maiden contract from Saudi Arabian national oil company Saudi Aramco.


“The $ 54-million EPC project involves the upgradation of a Crude Stabilization Unit at Aramco’s Abqaiq Plant, in Shaybah, one of the largest oilfields in the world,” the company said in a statement here.


The scope of work entails engineering, procurement and construction of a crude tank, replacement of crude pumps and associated civil, piping, electrical and instrumentation facilities. The project is scheduled to be completed in 29 months.


The Hydrocarbon SBU of Essar Projects, a global engineering, procurement, construction (EPC) contractor, has secured the contract from Saudi Aramco. The company is already executing five other projects in the region in the hydrocarbon sector.


Essar Projects, CEO, Hydrocarbon SBU, Amit Gupta said: “This contract is a reflection of our capability to undertake global projects from reputed clients in this region.


We will leverage the capabilities gained to enhance our foot print in other Middle East countries.” The company has experience in refinery projects having previously executed a world-scale grass-roots refinery at Vadinar, Gujarat, with an initial capacity of 10 million tons per annum, which was gradually expanded to 14 million tons and then 20 million tons.


It also executed the supporting infrastructure and facilities that include SBM for crude unloading, product jetty for refinery product export, a tank farm with total tankage of 3 million cubic metres for crude, products and intermediate and 77 MW of captive power plant.

(Source: The Economic Times, August 6, 2014)





At the 1955 Afro-Asian Relations Conference in Bandung, Indonesia, Jawaharlal Nehru wrote “Sudan” on his handkerchief to fashion a makeshift flag to celebrate the African nation’s imminent independence. Nehru and Indira Gandhi had visited Port Sudan in 1938, while Mohandas Gandhi had dropped by three years before in 1935. India’s first chief election commissioner, Sukumar Sen, oversaw Sudan’s first multi-party elections in 1953, and India opened a liaison office in Khartoum two years later.


A half-century later, in 2003, then deputy prime minister L K Advani stood at the Mangalore harbour as the oil tanker Sea Falcon delivered 600,000 barrels of Nile blend crude from ONGC Videsh Ltd (OVL)’s oil block in Sudan. “This is not imported oil,” Mr Advani reportedly said. “This is India’s oil.”


In The New Kings of Crude: China, India, and the Global Struggle for Oil in Sudan and South Sudan, Luke Patey details the corporate battles and diplomatic manoeuvring that made OVL and the China National Petroleum Corporation (CNPC) principal players in one of the world’s most politically unstable oilfields and offers a nuanced perspective on India and China’s global hunt for energy.


In 2013, India imported 3.86 million barrels per day of crude oil, overtaking Japan as the world’s third largest importer. We import a little over 70 per cent of our crude oil requirements that cost us nearly $160 billion last year.


While Indian investment in Africa pales in comparison with China’s ever-expanding engagement, the continent accounted for 16 per cent of India’s oil imports last year. India is now the biggest buyer of Nigerian oil, and OVL has acquired exploration blocks in Nigeria, Libya, and a stake in Mozambique’s recently discovered natural gas deposits.


In the coming decades, 700 million energy-deficient Indians are likely to transition from traditional fuels, such wood and biomass, to natural gas and electricity. Oil production in OVL’s asset in South Sudan, however, ground to a halt in December last year against the backdrop of a brutal and protracted civil war. Mr Patey’s account of OVL’s Sudan experience is particularly useful in this context.


Mr Patey, a researcher at the Danish Institute of International Studies, focuses on the development of the petroleum sector in Sudan, China and India, using anecdotes, interviews and first-person accounts to sketch deft portraits of the principal personalities and institutions that shaped this unlikely alliance.


The first section focuses on the relation between petrodollars, United States policy and Sudan’s measured descent into chaos; the second describes the political ascent of China’s powerful oilmen from the oilfields of Daqing to the rarefied realm of the ruling party’s Politburo. The India section profiles Atul Chandra, who served as the managing director of OVL at the time of the Sudan investment.


Mr Patey offers a balanced account of how CNPC and OVL eventually came to plumb the fields first developed in the 1970s by Chevron, the United States oil giant. While CNPC and OVL were mostly unaffected the by the global outrage over Sudanese President Omar al Bashir’s genocide in Darfur, and the current civil war in South Sudan – which has claimed over 10,000 lives and displaced 1.5 million people since January – the Chinese and Indians helped Sudan build its own oil sector and refine its own crude, unlike Chevron that hoped to simply siphon off crude to its refineries abroad.


The oil revenues, Mr Patey notes, in all likelihood prolonged the conflict by propping up the tottering regime in Khartoum. Yet OVL and CNPC were no different from a host of other oil companies working with similarly repressive regimes.


In 2011, however, both countries had to re-calibrate their relationship with Al Bashir’s regime when South Sudan declared independence after decades of civil war. The division left landlocked South Sudan with most of the region’s oil reserves, while Sudan retained the pipelines, most of the refineries, and Port Sudan, where oil is loaded on to tankers and shipped across the world.


While OVL has a stake in the Unity fields in the south, it has also financed a 741-kilometre pipeline in the north from the Khartoum refinery to Port Sudan.


Mr Patey also defuses alarm that Chinese companies are locking up oil resources across the world, by pointing out that the oil extracted in Sudan is sold on international markets rather than shipped back home to India or China. This, he notes, has led some to wonder how OVL’s investment’s abroad actually contribute to India’s energy security.


“It is difficult to assess how OVL’s oil production in Sudan and other overseas ventures could measurably improve India’s energy security,” he writes, explaining that any oil brought back to India would be governed by international market prices. “At best, the profits generated from Sudan … helped the Indian government to use the parent company as a funding source for the subsidy programme to provide cheap fuel.”


The New Kings of Crude is a clear-eyed account of the machinations of the newest players in the global oil business. The growth of India, China and the African continent is mirrored by the rise of a new and interesting rhetoric where deals, once delivered on the promise of “western technology” and know-how, are now forged on the anvil of “South-South” cooperation.

(Source: Business Standard, August 6, 2014)

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